January 10, 2014
TSG IntelBrief: Uzbekistan: A Country’s Challenges to Re-Energize Itself
One of the hallmarks of Central Asia’s complex history is the territorial takeovers by invading armies that gave birth to new civilizations and cultures. Iranian tribes first inhabited landlocked Uzbekistan, arriving from the north and settling in much of today’s Central Asia. The development of the Silk Road was a significant factor in Uzbekistan’s road to opulence. The country flourished in culture and trade, with the cities of Samarkand and Bukhara jewels of Iranian civilization in Central Asia. But the region’s conquest at the hands of Genghis Khan swept the Persians from the scene and gradually replaced them with Turkic speaking tribes.
From a geopolitical and geo-energy perspective, today’s Uzbekistan can be characterized as a young state trying to vitalize its economy and assert itself as a player in the region’s evolving trade and energy scene. It is—as nearly all other Central Asian and Caucasus states are—forging close economic and energy ties with China. In its drive to invigorate the country’s economy, Tashkent faces challenges in the following areas:
• Development of irrigation systems and access to clean water
• Development of the energy sector as the country faces an insufficient and outdated infrastructure, hampering its ability to monetize sizeable energy reserves and export hydrocarbon products to international markets
• Strategic direction in regional security, ambivalence toward Western powers, and growing concerns about the spillover effect of Islamic extremism from Afghanistan.
The government of President Islam Karimov, the country’s first president since independence in 1991, has a mixed record in political reform, corruption, and economic policy. Karimov has implemented wide-ranging economic and social reforms including introduction of a comprehensive tax code, abolition of capital punishment, and appointment of young, post-Soviet, mostly Western-educated officials to key government posts—moves that raised hope for democratic reforms.
But Karimov’s government is also known for its poor human rights record and treatment of dissidents, most notably the mass shooting of protesters in Andijan in May 2005, later recognized as a massacre. The event continues to weigh heavily on Karimov’s presidency and its relations with the West. Moreover, government corruption, despite reforms in recent years, is another challenge in rehabilitating the country’s international image. Currently, one of the president’s daughters finds herself at the center of a corruption scandal.
Security Issues and Relations with the US and Europe
The Andijan massacre was a turning point in Uzbekistan’s relations with the West. The European Union implemented an arms embargo amidst demands for an international investigation. Some US officials called for an end to all ties with Tashkent. Russia distanced itself from the country following the incident and neighboring Kyrgyzstan closed its borders due to concerns for the spillover effect of the violence next door.
The Uzbek response to international condemnation included termination of the US military’s use of the air base in Karshi-Khanabad near the Afghan border. The air base was a key logistics hub for military operations in the aftermath of the 9/11 attacks, and was part of Uzbekistan’s cooperation with the campaign to pursue al-Qaeda and dismantle potential and existing sanctuaries for extremist groups in Afghanistan. The US vacated the base in late 2005. However, the 2002 Strategic Partnership with the US, which covers both economic and security issues, remains in place.
Uzbek officials have demonstrated some ambivalence toward regional and international security. The country was a founding member of the Moscow-led Collective Security Treaty Organization, a key regional security organization. But Tashkent has twice withdrawn from it: first in 1999; rejoined in 2006, only to withdraw again in 2012. Distrust of big powers and negative views towards internal revolts in neighboring states are factors for Tashkent’s inconsistency in defining a national security strategy.
Uzbekistan has been a member of the Shanghai Cooperation Organization (SCO) since 2001, and under the SCO umbrella it established the Regional Anti-Terrorist Structure (RATS), which was signed in Tashkent in 2012. RATS promotes cooperation among SCO member states against what it calls “three evils of terrorism, separatism, and extremism.” Apart from SCO, in 2012, Tashkent entered a strategic partnership with Beijing, which focused on economic development. Similarly, Uzbekistan struck a partnership with Kazakhstan focused on development of clean water and modern irrigation systems.
Strategic Impact and US Interests
Uzbekistan sits on an estimated 600 million barrels of oil but faces declining production capacity due to lack of investment and aging infrastructure. The majority of its reserves are in the country’s southeast region of Bukhara-Khiva, with a production sharing agreement and joint venture as the primary form of development involving foreign oil companies. Key foreign players in the country’s energy sector include Gazprom and Lukoil of Russia, CNPC of China, Petronas of Malaysia, and South Korea’s KNOC.
Chinese investment in Uzbekistan is not limited to the energy sector. Over 500 Chinese companies are active in Uzbekistan’s high-tech, renewable energy (primarily solar), transportation, and irrigation sectors.
China’s omnipresence in Central Asia is indicative of a meticulously designed pivot to the region that leverages cultural affinities. It speaks to China’s ambitious development of its western provinces in order to secure market dependence on Chinese investment and technology. China also shares with the Uzbek government—as it does with most Central Asian states—the goal of stemming the growth of Islamic extremism.
As Chinese influence expands to the west in Central Asia, the dearth of US trade and presence in the region raises questions about balance. The region has not hosted a US president in recent years. In September 2013, Chinese president Xi Jinping visited four Central Asian states and signed new economic and trade agreements.
• Uzbekistan will continue to look for partners in developing its energy and clean water infrastructure
• China will be the dominant player in Uzbekistan’s economy as Beijing invests in diverse sectors of the economy.
• Uzbekistan’s population is around 29 million, with Uzbek representing the largest ethnic group at over 80%, followed by Russian 6%, and Tajik 5%
• Literacy rate is over 99%
• It is ranked in the world’s top 50 and 20, respectively, for proven oil and natural gas reserves; and according to the US Energy Information Administration, it is the 49th largest (total) oil and 14th largest natural gas producer
• Its nominal GDP is around the 70th largest in the world, and real growth rate estimated for 2012, was one of the top 20, at over 8%
• Uzbekistan ranked 146 of 189 countries assessed in the 2014 World Bank, International Finance Corporation Ease of Doing Business survey, up from 156 in 2013
• Uzbekistan is approximately 88% Muslim and 9% Eastern Orthodox.
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